Hewlett-Packard confirmed yesterday evening it is to split the company in two under a reorganisation that will separate the testing, medical and chemical products businesses from the computing and imaging businesses.
The testing, medical and chemical products businesses will become part of a new measurement company, which will represent $7.6 billion of HP's total revenue of $47.1 billion in fiscal 1998. Edward Barnholt, currently general manager of the measurement unit in HP, will become chief executive of the new company.
"We are taking this action to sharpen the strategic focus of our businesses, improve their agility and increase their responsiveness to customers and partners," said HP chief executive Lewis Platt. "This will offer exciting opportunities for our employees and will enhance the two new companies' growth and earnings potential."
Throughout yesterday rumours swept the stock markets that HP was planning to announce a drastic restructuring that would split the company in two. The company released a statement around midday US time so its shares could resume trading, having been suspended because of the rumours. (see yesterday's story)
The remaining computer and imaging company will operate under the Hewlett-Packard name and will include all of HP's enterprise computer, software and services, personal computer and printing and imaging businesses.
"These businesses will operate more autonomously and will adapt quickly to changing market needs," the company said in a statement.
HP stockholders will receive shares in each company. HP said it is considering a public share offer for approximately 15 per cent of the measurement company's outstanding shares by year end. It claimed this offering would be the largest technology share offer in Silicon Valley history. Subsequent to the IPO, HP said it would distribute the remaining shares to its stockholders in a tax free transaction.
The company said it did not expect any job losses as a result of the reorganisation.
"This announcement is not about major short-term cost reductions," said Robert Wayman, chief financial officer. "Where we need to realign our workforce to support the new companies, we will manage this, as we have in the past, through our traditional approaches, such as redeployment, flex-force adjustments and attrition."
Once the reorganisation is complete, Lewis Platt, chairman chief executive and president of HP, will leave the company. (see full story)
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